How do financiers decide whether or not to lend you money when you submit a car loan application?

1. Capacity

The golden rule of finance and the very first thing a lender will assess when deciding whether to approve your finance application is capacity. They want to be 100% certain that you are able to afford to pay all your current expenses including rent/mortgage, weekly living expenses, other loan commitments and liabilities as well as the loan you are currently applying for.

2. Character

Character is another important thing a lender will consider while assessing your car loan application. This includes looking at your overall profile and stability. They will take into account your employment status and history as well as your current living arrangement and residency history. Consistency in both employment and residency are two very significant things that can increase your prospects of being approved for vehicle finance.

Credit History is the other aspect of character that a lender will evaluate when considering your application for car finance. They will consider based on your previous credit history whether you are likely to honour your obligation to repay the loan. A good credit history and/or previous loan repayment history will also assist you greatly in demonstrating to a lender that you will repay your loan commitment.

3. Capital

Capital refers to your current financial position. A lender will take into consideration your current assets such as properties, vehicles and other assets versus your current liabilities such as other loans, mortgages and credit cards to get a good idea of your overall financial position. Having a low level of debt compared to assets will also help a lender to look favourably upon your application for car finance.

4. Collateral

For a secured car loan, the vehicle or asset is usually used as security or ‘collateral’ for the loan. This means that the lender has an encumbrance over the asset, therefore if you were to stop making repayments or default on the loan, the lender would repossess the asset and generally sell it to recover their losses. Generally, a secured loan poses less risk for a lender because they do take security over the asset and therefore the interest rates offered on a secured car loan are lower.

5. Conditions

For most types of loans other that a personal loan, the lender will want to know the purpose of the loan, e.g. to purchase a vehicle. A lender may also consider other factors such as environmental and economic conditions when assessing your application for finance.

Which lender or bank will give me the best rate on my car finance?

It is important to remember that every financier has vastly different criteria for lending as well as different appetites for risk. While some financiers may be more lenient regarding length of employment and residency, others may not, however they may be more lenient and willing to finance certain types of assets.

An experienced finance broker will have a very thorough and intimate knowledge of lender guidelines and will be able to accurately gauge which bank or non-bank lenders will favour your individual profile, as well as the profile of the vehicle or asset you intend to buy.

This is extremely important to ensure you not only have the best chances of getting approved for your finance with minimum fuss, but also get the best possible approval to suit your needs.

Loans For U has accreditations and long-term relationships with over 40 of Australia’s most trusted financiers and each of our finance consultants have an average of over 10 years’ industry experience, so you can be sure that you’re in good hands when you choose Loans For U for your individual finance needs.

How do I know I’m getting the best car finance options through Loans For U?

It is simple, we offer a “best approval guarantee”.

We are so confident that we will get you the best rate on your finance approval that we will either beat your current approval or we will give you $50*.

Applying for finance is easier than ever, simply phone us on 1800 538 287 or apply online and one of our experienced consultants will be in contact as soon as humanly possible to assist you in securing your pre-approval.

*Simply provide your written Approval and we will beat it guaranteed! If we can’t, we will give you a $50 Visa gift voucher. Approvals exclude new vehicles, manufacturer campaigns or sale events. Must provide written approval letter stating financier, interest rate, term, repayment, period of approval and conditions. Offer valid till 31st August 2020.